Surging Rolls Royce shares helped nudge the FTSE 100 into positive territory, with investors celebrating news that the engine maker had swung to an annual profit.

Rolls Royce jumped 11.4% or 95p at 924p, topping London’s blue chip index which ended the day up 0.16% or 11.09p at 7,157.84p.

It came as the company reported a return to profit with a pre-tax surplus of £4.9 billion, thanks to a £2.6 billion accounting boost from recent strengthening of the Brexit-hit pound that helped it bounce back from a record loss of £4.6 billion in 2016.

The swing to profit highlights how well the restructuring plan is going
David Madden, CMC Markets UK

David Madden, market analyst at CMC Markets UK, said: “The swing to profit highlights how well the restructuring plan is going.

“There is still more work to be done in relation to reorganising, as the company plans to reshape the business into three units, down from five at the moment.

“Rolls Royce failed to comment on whether there will be a reduction in the head count. The stock hit its highest level since November today, and if the bullish move continues it could target 1,000p.”

Across Europe, the French Cac 40 and German Dax were up 0.3% and 1.09%, respectively.

In currency markets, the pound was nearly flat against the US dollar at 1.388, and was up just 0.05% versus the euro at 1.120.

Brent crude prices tumbled 1.7% to 64.36 US dollars per barrel after the Energy Information Administration reported growing US oil stockpiles and a smaller than expected drop in gasoline inventories that raised concerns over a glut of global supplies.

In UK stocks, Paddy Power Betfair shares fell 280p to 7,940p despite reporting an 18% increase in full-year underlying earnings, as investors turned their attention to a spate of sporting upsets that benefited bookmakers but resulted in punters placing fewer bets themselves.

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The betting industry is also facing a raft of regulatory changes aimed at cracking down on problem gambling, including curbs on fixed-odds betting terminals – though Paddy said it was “well positioned” to deal with any regulatory challenges.

Legal & General rose 2.5p to 260.3p after the insurer reported record annual profits – up 32% to £2.1 billion – helped by changes in life expectancy rates and a strong performance in its retirement division.

Customers are not living as long as expected, which helps life insurers such as L&G, who pay out bigger sums the longer an individual lives.

Shares in Restaurant Group jumped 17.2p to 254.6p after saying it was banking on healthier vegan and vegetarian dishes to boost its performance this year.

It seemed to soften the blow of a drop in adjusted pre-tax profits from £77.1 million to £56.7 million in 2017.

Debenhams edged lower by 0.12p to 27.76p amid news that it has struck a concession deal with French interiors brand Maisons du Monde in its latest move to revamp trading.

The group said it would include Maisons du Monde shop-in-shop concessions in three of its stores this spring – in Debenhams Westfield (London), Birmingham and Manchester.

The biggest risers on the FTSE 100 were Rolls Royce Holdings up 95p to 924p, Smurfit Kappa up 176p to 3,218p, Evraz up 15.4p to 455.1p, and Just Eat up 23.8p to 768.6p

The biggest fallers on the FTSE 100 were WPP down 49p to 1,210.5p, Paddy Power Betfair down 280p to 7,940p, NMC Health down 84p to 3,274p, and Intertek Group down 101p to 4,991p.